Corporate fraud and corruption in Pakistan is widespread (Rose-Ackerman, 1997, p. 4), particularly in the government and police forces. However by 2013 the country had improved by 12 indices compared to its previous rank – in 2012, 139 out of 174; in 2011, 134 out of 182; in 2010 143 out of 178; and in 2019, 139 out of 180. And in 2017, Pakistan saw a significant improvement in its statistics, with the Corruption Perception Index by Transparency International ranking the country 117th out of 180 countries. However Transparency International latest report (Jan 2020) indicated that Pakistan is a more corrupt country than it was in year 2017. There is a need to reform accountability and anti-corruption policies in Pakistan. Read the answers to the following questions:
- To what extent are boards and senior executives in Pakistan taking proactive steps to reduce incidences of fraud and corruption from surfacing within their company?
- Have there been any significant legal and regulatory developments relevant to corporate fraud and corruption in Pakistan over the past 12-18 months?
- When suspicions of fraud or corruption arise within a firm, what steps should be taken to evaluate and resolve the potential problem?
- Do you believe companies are paying enough attention to employee awareness, such as training staff to identify and report potential fraud and misconduct?
- How has the renewed focus on encouraging and protecting whistleblowers changed the way companies manage and respond to reports of potential wrongdoing?
- and much more…
To what extent are boards and senior executives in Pakistan taking proactive steps to reduce incidences of fraud and corruption from surfacing within their company?
Zafar: Rising fraud risks have driven companies to establish the right steps to prevent fraud and corruption from surfacing. Following through with a focused trajectory ultimately also ensures failsafe protections are put in place, which will guard against scandals or negative publicity, while minimising risk exposure. There is quite a notable empirical rise in the frequency of companies conducting background screenings to nip corruption in the bud. Though checks can vary in nature, enforcing internal controls by implementing ISO strategies can bring pivotal change to a company’s strategy.
Have there been any significant legal and regulatory developments relevant to corporate fraud and corruption in Pakistan over the past 12-18 months?
Zafar: Hard-line anti-fraud and anti-corruption policies are becoming more commonplace. Companies can face hefty fines for breaching the statutory parameters set forth by regulatory authorities. Transparency International is also driving many GCC countries to improve their anti-fraud and corruption provisions. Public participation and whistleblower tip-offs have also contributed to the monitoring process, thus encouraging the establishment and sanctioning of management systems designed for anti-corruption purposes.
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How has the renewed focus on encouraging and protecting whistleblowers changed the way companies manage and respond to reports of potential wrongdoing?
Zafar: Whistleblowing is regarded with increasing importance by many companies, and this is then communicated during the onboarding process to ensure awareness of potential risk areas and wrongdoing. The most important aspect of this would be to ensure clarity on the whistleblowing process itself. Confidentiality and privacy security assurance to whistleblowers is, above all, what would boost employee confidence to responsibly partake in helping to safeguard the company’s integrity by blowing the whistle without the fear of inviting any undesirable impact, such as jeopardising their job security.
Could you outline the main fraud and corruption risks that can emerge from third-party relationships? In your opinion, do firms pay sufficient attention to due diligence at the outset of a new business relationship?
Zafar: The ‘Pandora’s box’ of corporate fraud and corruption may comprise issues pertaining to insurance claim fraud, investment ‘black holes’, ghost companies and criminal and civil litigation precedent, among others. There is a greater need for third-party risk management services due to the rapid expansion of companies.
What advice can you offer to companies on implementing and maintaining a robust fraud and corruption risk management process, with appropriate internal controls?
Zafar: Risk management is an essential part of minimising the costs that can arise in the long term due to losses and falling prey to fraudulent practices in the corporate realm. This can be implemented through a resilient management system that has been designed to specifically target any loopholes and any roadblocks, the impact of which can often be greater than anticipated, rattling the company and causing harm that could lead to lawsuits, unanticipated monetary and financial losses and hefty fines imposed by regulatory authorities, from which the company may never recover.
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When suspicions of fraud or corruption arise within a firm, what steps should be taken to evaluate and resolve the potential problem?
Zafar: Vigilance from compliance professionals must ensure that fraud is detected within companies. If such suspicions are aroused, a prompt response strategy must be put in place. However, if the suspect is ultimately found innocent, it may dampen employee morale and affect the company’s credibility and reputation. Setting up a committee is an integral step to helping companies investigate any potentially fraudulent activity, the quorum of which should be comprised of senior management, finance, compliance and HR professionals. In the interest of avoiding any internal conflicts of interest, an independent investigation company should be employed to conduct due diligence on the suspect and share the report with the committee for immediate action to be taken against the suspect, if proven guilty.
Do you believe companies are paying enough attention to employee awareness, such as training staff to identify and report potential fraud and misconduct?
Zafar: Previously, these areas were untouched but now the picture has changed, and with the changing scenario comes rapid evolution. Increasing global compliance requirements and awareness regarding corruption have increased employer awareness. Essentially, compliance professionals are now increasingly required to have adequate and up-to-date knowledge of anti-bribery and anti-corruption practices. Therefore, compliance and HR teams are ensuring the maintenance of well-versed and explicit policies for dealing with misconduct and fraud cases. It is now also a norm to see frequent awareness sessions and dedicated training sessions conducted to ensure compliance with these policies within the corporate realm, particularly in conjunction with certification bodies for hands-on training from experts.
Zafar I. Anjum, Group Chief Executive Officer | MSc, MS, LLM, CFE, CII, CIS, Int. Dip. (Fin. Crime), MICA, MIPI, MAB
Building 30 years’ career in the areas of anti-corruption, compliance, risk management, fraud prevention, protective integrity, security and compliance; Zafar Anjum is a highly respected professional in his field.
As a trusted authority in anti-bribery and anti-corruption, fraud risk assessment and prevention, corporate compliance evaluation, securities among corporate clients, government agencies and industry groups, he is known for creating stable and secure networks across challenging global markets. With an impressive educational background coupled with his industry expertise, Zafar Anjum is often the first certified global investigator on the scene when multi-national EMEA corporations seek to close compliance, anti-bribery and anti-corruption or corporate security gaps.
Starting his educational background in 1989 with his Bachelor of Arts Degree; he then went on to earn a Master of Science in Counter Fraud and Counter Corruption University of Portsmouth in the United Kingdom along with specialized knowledge and certification in Fraud Investigations, Fraud and Financial Crimes, Corporate Fraud Control and Anti-Corruption. He also awarded with Distinction in Master of Fraud and Financial Crime and included in Executive Dean’s List of 2016 by Charles Sturt University, Australia.
All while continuing to earn his LL.M Legal Practice (Master of Laws) (Intellectual Property) from the University of Law in the United Kingdom; which he was completed in February 2019. Alongside to enhanced further capabilities and competencies specifically in Bribery Risk Assessment framework, he is undertaking ICA International Diploma in Governance Risk, and Compliance, ICA International Diploma in Financial Crime and Prevention, ICA International Diploma in Anti Money Laundering from International Compliance Training Academy in the United Kingdom which is mapped and are also awarded in association with Alliance Manchester Business School, The University of Manchester.
Both his training and business acumen give Zafar Anjum in-depth precision when dealing with fraud risk management, security consultations, crime investigations, crisis management, risk governance, event security and strategic threat management for industry leaders seeking proactive long-term risk prevention. His leadership abilities create strong collaborative relationships among prevention teams, crime investigators, government officials, as well as business executives seeking dynamic solutions across international marketplaces.
For industries needing large project management, safeguard testing and real-time compliance applications, Zafar Anjum is the assurance expert of choice for industry professionals. Zafar I. Anjum is a Certified Fraud Examiner, Certified International Investigator and has a MSc Counter Fraud and Counter Corruption Studies from the University of Portsmouth UK, Master of Fraud and Financial Crime from CSU Australia and a LL.M Legal Practice (Intellectual Property).
ABAC® Center of Excellence is an independent certification body powered by CRI Group. ABAC® offers a complete suite of services and solutions designed to educate, equip and support the world’s leading business organisations with the latest best-in-practice risk & performance assessments, systems improvement & standards certification. Find out more about ABAC®!
ABAC® programs protect your organisation from damaging litigation & safeguard your business in the global marketplace by providing certification & training in internationally recognised ISO standards, such as ISO 37001 Anti-Bribery Management Systems, ISO 19600 Compliance Management Systems and ISO 31000 Risk Management Systems.
Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle. Contact CRI Group today for further information on how CRI Group can help your business.
If you find yourself in an ethical dilemma or suspect inappropriate or illegal conduct, and you feel uncomfortable reporting through normal channels of communication, or wish to raise the issue anonymously, use CRI Group’s (our parent brand) Compliance Hotline. The Compliance Hotline is a secure and confidential reporting channel managed by an independent provider. When reporting a concern in good faith, you will be protected by CRI Group’s Non-Retaliation Policy.
CRI Group (ABAc parent brand) was included in the 2018 Annual Review: UAE Corporate Fraud & Corruption, published by Financier Worldwide Magazine. The above is an updated version of the Financier Worldwide reprint.